97-3274(IT)I
BETWEEN:
EDWARD (TED) BELYEA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on September 1, 1998, at Belleville, Ontario, by
the Honourable Judge Michael J. Bonner
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Wayne Lepine
JUDGMENT
The appeals from the assessments under the Income Tax Act for the 1994 and 1995 taxation years are dismissed.
Signed at Ottawa, Canada this 13th day of November, 1998.
|
"Michael J. Bonner" |
J.T.C.C.
Date: 19981113
Docket: 97-3274(IT)I
BETWEEN:
EDWARD (TED) BELYEA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bonner, J.T.C.C.
[1] This is an appeal from assessments of income tax for the Appellant's 1994 and 1995 taxation years. The Appellant and his wife separated in 1991. In October 1991 they entered into a written agreement, the body of which reads as follows:
1. As of this date it is agreed that Patricia Aileen Belyea will be paid by Edward James Frederick Belyea a one time sum of NINE THOUSAND FIVE HUNDRED DOLLARS ($9,500.00) to purchase furnishings to establish an apartment; and an ongoing monthly living allowance of SIXTEEN HUNDRED DOLLARS ($1,600.00).
2. This agreement will be in effect until the sale of the matrimonial home at 20 Stanley Park Drive, Belleville, Ontario which property is held jointly.
3. On completion of the sale of the matrimonial home at 20 Stanley Park Drive, Belleville, Ontario, the parties agree that they will negotiate a new separation agreement.
[2] The matrimonial home referred to in paragraph 3 of the agreement was sold on December 18, 1992. The Appellant believed, on the basis of legal advice given to him, that he was obliged by the October 1991 agreement to continue to pay to his spouse, after completion of the sale of the matrimonial home, the monthly living allowance referred to in paragraph 1 of the agreement. It appears that it was thought that the obligation to pay the allowance under paragraph 1 did not come to an end until a new agreement was negotiated, as contemplated by paragraph 3 of the agreement. No new agreement was ever concluded.
[3] The Appellant continued after the sale of the matrimonial home to make payments to his wife initially at the rate of $1,600 per month and subsequently at a lesser rate. The issue in this appeal is the deductibility, under paragraph 60(b) of the Income Tax Act, of the payments so made. Paragraph 60(b) in the form applicable to the period in question, is as follows:
There may be deducted in computing a taxpayer's income for a taxation year such of the following amounts as are applicable:
(b) an amount paid by the taxpayer in the year, pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written agreement, as alimony or other allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the marriage, or both the recipient and children of the marriage, if he was living apart from, and was separated pursuant to a divorce, judicial separation or written separation agreement from, his spouse or former spouse to whom he was required to make the payment at the time the payment was made and throughout the remainder of the year;"
[4] The sole issue raised by the appeal is whether the 1994 and 1995 payments were made pursuant to a written agreement as required by paragraph 60(b). The Appellant's position is that his obligation under the October 1991 agreement to support his spouse did not end with the sale of the house. In essence, he took the position that the combined effect of paragraphs 2 and 3 of the separation agreement was to require the renegotiation of the amount of the allowance following the sale of the home and that pending the conclusion of a new agreement, the quantum of the allowance was to remain unchanged. The position of the Respondent was that paragraph 2 of the agreement brought the agreement to an end when the matrimonial home was sold.
[5] In my view, paragraph 2 of the agreement conclusively defines the period during which the obligation to make monthly support payments was to remain in effect by stating "This agreement will be in effect until the sale of the matrimonial home ...". Payments made during the period following the sale of the home must therefore be regarded as falling outside the scope of the agreement. The payments in issue were not made pursuant to any other written agreement or pursuant to any court order or judgment. They were therefore not deductible by virtue of paragraph 60(b).
[6] For the foregoing reasons, the appeals are dismissed.
Signed at Ottawa, Canada, this 13th day of November 1998.
|
"Michael J. Bonner" |
J.T.C.C.
COURT FILE NO.: 97-3274(IT)I
STYLE OF CAUSE: Edward (Ted) Belyea
PLACE OF HEARING: Belleville, Ontario
DATE OF HEARING: September 1, 1998
REASONS FOR JUDGMENT BY: Judge Michael J. Bonner
DATE OF JUDGMENT: November 13, 1998
APPEARANCES:
Counsel for the Appellant: The Appellant himself
Counsel for the Respondent: Wayne Lepine
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada